November 2009

Someone in the chat room asked for reading in crude, but I can't find anything more in the chart than you can. The December contract has been working on a bullish flag for more than a month, and there's not much more you can say.  If you study the hourly chart closely, you'll see that the tail end of it -- meaning everything from Tuesday on -- has provided camouflage for a long entry at 79.22, with an 80.86 target and a 79.77 midpoint.  This may not portend the beginning of a breakout, but the pattern itself provides a way to bet on it without risking an arm and a leg. _______ UPDATE (1:03 p.m):  Crude made it to 80.53 before diving, so longs, even trailed by a generous stop-loss, would have made money without cooperation from the larger trend.

Gold was getting whacked in the wee hours and looked bound for 1136.60, or perhaps 1134.20  if any lower. You can try bottom-fishing at the lower number, stop 1133.40.  If these Hidden Pivot supports fail to show any pluck, it would suggest that the weakness is likely to spill into next week.  Alternatively, the futures would need to push above 1147.70 today to be in a good position to kick bear butt when the new week begins. ______ UPDATE:  The overnight trade would have worked in theory, since the 80-cent stop-loss caught a rally four times that (i.e., $3.20).  Gold turned sonofabitch thereafter, chopping up bulls and bears alike as it hacked its way lower, changing nothing in a bigger picture that remains bullish.

If we were to pick the one investment most likely to outperform all others over the next hundred or even five hundred years, it would be a painting by Andy Warhol. The artist’s soup cans, Brillo boxes and Marilyn Monroe silkscreens will probably be as recognizable centuries from now as they are today, powerful icons of an age in which beauty itself came to be repudiated by artists and disdained by dealers (if not necessarily by their clients). Perhaps centuries from now, historians and art critics will have a better idea of how this came to be, and how even prestigious museums like the Whitney got hooked on trash. The longer these disturbing trends continue, however, the greater will be the dollar value of Andy Warhol’s works, since, even in their own time, his paintings forcefully evoke a civilization that ran amok aesthetically and morally. Meanwhile, Warhol’s reputation and collectibility appear rock-solid even in hard times. Amidst a deepening global recession, buyers turned out at Sotheby’s last week to bid his paintings into the sky. The featured work, “200 One Dollar Bills,” one of the artist’s first silkscreen paintings, sold for $43.7 million. (I have not reproduced this painting because it is neither more nor less than you might have inferred from its title.) That was more than three times its high estimate of $12 million, and it helped push the auction to an impressive total of $134 million. Other less-prized Warhol works auctioned that night fetched similarly stunning prices. A sketch of roll of cash with a high estimate of $3.5 million drew a winning bid of $4.2 million, and a self-portrait with a top estimate of $1.5 million sold to a London collector for $6.1 million. Can you think of any other market as hot as this one? If

We've been using a Hidden Pivot at 18.560 as a minimum upside projection, but another at 18.535 looks just as likely to impede  the rally.  A close above it would all but clinch a follow-through to at least 18.560, but a close above that last number would open up a path to as high as 20.765 over the near term.

I've flagged a compelling rally target in GLD, since it looks like it has potential to reverse the bull trend decisively -- presumably for at least a week or more. If it is hit at the same time our 1174.90 target is achieved by Comex Gold, that would be particular reason for long-term bulls to reef the sails.

Careful now, since, as you can see in the accompanying chart, GLD is very close to achieving the highest target that can be projected using the daily chart. It lies at exactly 115.10,  about 2.8% above current levels, and we'll try to short it if and when the rally gets there.  Long-term bulls are advised to lighten up, since it seems highly unlikely that buyers will be able to power past the resistance on first encounter.

A rally target at 1174.90 is still our minimum upside objective, although it has the potential to produce an important top. Night owls looking for a way in can test the water at 1136.80, stop 1136.20, provided 1142.50 is not exceeded to the upside first. If the stop is hit and the futures go just a bit lower, exceeding 1135.40, that would turn the lesser charts decisively negative for the near term. _____ UPDATE (2:00 p.m.): My niggardly stop-loss missed the low of a terrific rally by three ticks.  Meanwhile, Harry, weighing in last night in the chat room, had the right idea, since his stop at 1135.80 was protected by a prior low just above it and the round-number stubbornness of 1136.00. 

All of you should have noticed by now that the futures are having difficulty mustering a seemly correction after topping two days ago just three ticks from an 1113.00 rally target. This means they want to go higher, of course, and so they will.  We should therefore consider the 1132.25 target given here earlier as being in play, and you can trade it however you please. Night owls looking for entree will probably need to zoom down to the one- or three-minute chart to find a pattern subtle enough to yield a low-risk entry opportunity, but please note that all external peaks have been exhausted if you were looking to board with-the-trend.

Has the stock market’s meltdown wrecked the Baby Boomers’ retirement dreams? Not necessarily, provided  one is prepared to spend less now and retire at 70 rather than 65. That’s the gist of the plan that my friend Doug Behnfield, has laid out below. Doug, whose back-of-the-napkin thoughts on the economy were featured here last summer, is a top-producing stock broker who has always lived well within his means.  Here’s his tough-love advice:  I am going to use as a template for the Baby Boomer, someone my age (55) and in the 80th percentile of household income, which I assume to be about $150,000. Due to the real estate mania and the favoring of real estate "investment" over traditional savings, combined with home equity extraction for consumption, I am guessing that mortgage debt ($200,000) exceeds retirement savings ($100,000) leaving this household upside down by $100,000. They spend all their after-tax income ($115,000) leaving a 0% savings rate because, although they put $15,000 or $20,000 into the 401K, they also borrow for   a car, a tuition or a kitchen remodel every year. If they were to replace their employment income with retirement income, they would need to save over $2 million, because, at a 4.5% distribution rate, they need over $90,000 pre-tax per year to supplement Social Security. Since they can't save $100,000 to $150,000 per year for the next 10 years to retire at age 65 with dignity, I am proposing an alternative solution composed of three basic parts:   1) Postpone retirement to age 70. This gives you 50% more time to accumulate retirement savings and reduces the duration of retirement, possibly allowing for a higher (5.5%?) distribution rate and a larger Social Security benefit.  No New Kitchen  2) Cut your annual budget and increase your savings by $40,000 per year. This means